Comcast close to buying Time Warner Cable for $45 bn

Comcast Corporation, the largest cable operator in the US, is close to striking a deal to buy Time Warner Cable (TWC) for $45 billion, several media yesterday reported.

The all-stock deal is likely to be announced today, and the friendly transaction is expected to close without regulatory hurdles by the end of this year, said the reports.

Last month TWC rejected a $132.50 per share in a cash and stock offer from smaller cable operator Charter Communications. (See: Charter Communications offers $61 bn to buy Time Warner Cable)

Comcast, the parent company of CNBC and NBC had been quietly considering a deal with TWC for some time, but was reported to have been seeking advice on possible regulatory hurdles if it were to pursue a bid.

Comcast does not think the regulators would stop such a deal on antitrust grounds, though rivals could try to convince the regulators not to allow the deal to go through.

The merger of Comcast and TWC would create one giant provider covering over 60 per cent of subscribers in the US and would account for one-third of all pay-television customers.

On 11 February Comcast announced it had signed an agreement with Warner Bros. to start selling the studio's titles through the Xfinity On Demand digital store.

Gravity, one of the top-grossing movies of 2013, earned 10 Academy Award nominations including Best Actress, Best Director and Best Picture and will be among the first titles for purchase, beginning February 11. Additional Warner Bros. titles that will become available for purchase include: 42, Argo, The Great Gatsby, The Hobbit: An Unexpected Journey, The Lord of the Rings trilogy, Man of Steel, Pacific Rim, Prisoners, We're the Millers, The Conjuring, The Following, Getaway, The Hangover Part III, and Veronica Mars.

Michael Schreiber, senior vice president of content acquisition at Comcast had said in a statement, "We are thrilled to add the Warner Bros.' hit films and television shows to our rapidly expanding offering of titles available for purchase." 

Though the US Federal Communications Commission had objected to this level of consolidation in the past, regulators had been stymied by the Court of Appeals for the DC Circuit, which had thrown out a rule prohibiting cable companies from controlling over 30 per cent of the industry.

The court found such a cap to be arbitrary, especially in the context of the rise of satellite television as an alternative to cable.

With more than 15 million customers, TWC offers data, video, and voice services to businesses of all sizes, cell tower backhaul services to wireless carriers and, through its NaviSite subsidiary, enterprise-class hosting, managed application, messaging and cloud services.

It posted net income of $2.2 billion in 2012 on revenues of $21.4 billion.

It carried out its biggest acquisition in 2011 when it purchased Insight Communications Co from private equity firm Carlyle Group, for $3 billion, in order to expand into three Midwest states - Kentucky, Indiana and Ohio.